ECONOMYNEXT – The first talks to restructure 175 million dollars in guaranteed bonds of SriLankan airlines have failed, a statement by the airline and the government said.
“Despite constructive discussions, the Parties did not come to an agreement on restructuring terms,” the statement filed in the Singapore Stock Exchange, said.
SriLankan had proposed to exchange the bonds for 60 million dollars in cash and the rest in Sri Lanka government 4 percent bonds due in 2028 with a 20 cent haircut for a dollar.
The bondholders had proposed repayment of principle (1 dollar) and accrued interest.
Govt Proposal
Appendix 1: Indicative Restructuring Proposal from the Company and the Government
The proposed liability management transaction involves an offer to noteholders to
participate in: (i) a cash tender offer, and/or (ii) an exchange offer for notes issued under
a tap of the Sri Lankan Government 2028 USD 1.20 billion 4.00% bond1.
• Cash Tender Offer
– Under the tender offer, SLA and the Government will allocate up to USD 60
million in cash to finance a partial tender of the notes, through an unmodified
reverse Dutch auction process, with a ceiling price equivalent to 80% of their
total claim amount (principal, accrued interest and past due interest of
SLA’s bond), as of June 30, 20252.
– If the offer is oversubscribed, notes tendered at the cut-off price will be
allocated pro-rata. Any notes tendered but not accepted will be reallocated to
the exchange offer.
o If the tender offer is not fully subscribed, the remaining cash will not be
deployed by Sri Lankan Airlines / the Government.
• Exchange Offer
– Noteholders will also have the option to exchange their notes for Government
bonds of the Sri Lankan 2028 USD 1.20 billion 4% bond3, which amortizes in
three installments: April 2026 (~27.4%), April 2027 (~27.4%), and April 2028
(~45.2%)4. Government bonds distributed as part of the exchange will be raised
via a tap of the existing bonds.
– Holders who voluntarily exchange their defaulted bonds will receive USD
0.80 in principal amount of the Government bonds for every USD 1 of their
total claim amount (principal, accrued interest and past due interest)
offered or reallocated into the exchange offer.
– Upon reaching the required level for triggering collective action clauses under
the notes, any notes not voluntarily tendered or exchanged will be
mandatorily exchanged for Government bonds, with holders receiving USD
0.70 in principal amount of Government bonds for each USD 1 in total claim
(principal, accrued interest and past due interest).
Counter offer of the bondholders
Appendix 2: Indicative Restructuring Counterproposal from the Group
The Group made the following indicative restructuring Counterproposal to the Company
and the Government of Sri Lanka.
• Principal
– Bondholders to have the option to exchange US$1 in outstanding principal
amount under the Notes into an equivalent principal amount in the
Government 2028 USD 1.20 billion 4.00% bond (ISIN: XS2966242500)5
• Interest
– All accrued and unpaid interest (including default interest) on the Bonds up to
but excluding the Completion Date6 to be paid in cash
• Early Bird Fee
– An early bird consent fee equivalent to 3% of the outstanding principal amount
of the Bonds held by each consenting Bondholder as at the Early Bird Consent Date.